Independent spends £5m on tabloid

The tabloid version of The Independent cost its parent company £5m in the last three months of 2003 but was worth every penny, chief executive Ivan Fallon said.

The newspaper's circulation is 15pc up on last year as a result of the new format, which Mr Fallon said should help the paper return to profit next year. The Independent made an operational loss of about £9m in 2003, which Mr Fallon said would halve this year before reaching break-even or better in 2005.

The tabloid version of the paper now accounts for about 74pc of newspaper sales, and Mr Fallon said it was inevitable that the broadsheet version would disappear in time. "We always said we would let the reader choose," he said, "and it seems they are choosing the compact version."

He also criticised The Times, saying the paper had "made mistakes" in its own rival tabloid version. "They have not exactly replicated the broadsheet version and I detect a little bit of ambiguity over how committed they are to a compact whereas our people have taken to it with incredible enthusiasm," he said.

Mr Fallon said that advertising revenues in the UK were still flat, though that was offset by strength in the company's South African and Australasian operations. Last year the company reported advertising sales growth of 5.5pc and a rise in circulation revenues of 6.9pc.

Overall, pre-tax profits went up from 22m to 122m, after disposal gains, on turnover up 5.9pc to 1.39billion. Before exceptionals items, which include a 50m restructuring charge, operating profits were up from 216m to 233m.